A lot of airlines post losses these days and most analysts say, that smaller European airlines won't be able to survive on their own due to the high oil prices.
So I got to thinking about Iceland Air. I know they are a very small airline and that through there geographical position shouldn't be compared with let's say OS or AZ, but I wonder if they will be able to continue to be an independent carrier in the next years. They aren't even member of own of the big alliances.
Any news on how there are doing and if there are in talks with other major airlines to cooperate? Are flight from KEF high yields?

i'd also like to know which portion of their business is o&d as opposed to USA-KEF-Europe & vice versa.
i have often heard about people flying on them via iceland because they are cheaper, but i rarely see them as the cheapest route across the pond.

I know BOS has enough O&D for Iceland, and we were one of the first airports they served. From what I've heard FI is doing fine. Keep in mind that Iceland itself is small, with only 300,000 people. That is slightly less than the entire city of Minneapolis. If MSP-KEF disappeared, it would leave only BOS, JFK, and Sanford as their only destinations in the USA. I'm surprised that MSP-KEF is being suspended because of the Scandinavian population in Minnesota. Of course, having a large Scandinavian population doesn't necessarily mean it has enough O&D for Scandinavia.

Icelandair is probably just fine. They have a history of extremely well managed and very stable.

Quoting CO 757-300 (Reply 1):i have often heard about people flying on them via iceland because they are cheaper, but i rarely see them as the cheapest route across the pond.

As you know, this suggests they are attracting plenty of passengers to fill the seats already, if they are not needing to offer the lowest prices.

Icelandair has some unique attributes. They have the advantage of linking the USA and Europe with extremely low-CASM and fuel efficient 757 aircraft thanks to Iceland's ocean location. This location has always helped them. So, for example BOS-KEF-MXP can be done with a 757 or narrowbody with excellent CASM. They are kind of like the freighter companies that stop at ANC or DXB for fuel. It is operationally very efficient to stop midway in these longhaul flights. So they can link a lot of markets on 757 that nobody else can.

Quoting from their 1Q investor report, "We are in the process of adapting the companies within Icelandair Group to the
new reality through streamlining and improved flexibility. We have simplified
the structure of the Group, and Sigþór Einarsson becomes the Groups´ deputy
CEO. The recently appointed CEO of Icelandair, Birkir Hólm Gudnason, has
already made changes in Icelandair and there are further changes ahead. An
agreement has been concluded on leasing the first Boeing 787 Dreamliner that
the company has on order. Icelandair Cargo growth plans have been discontinued.
A decision has been made for the company to re-enter the travel agency market.
Short-term wage contracts have been negotiated with airline staff.

Through these and other actions we are solidifying our core operations,
reducing risk and strengthening Icelandair Group for the future."

I seriously doubt the Icelandic govt would allow the airline to go under, in the extreme case. Few other airlines have shown any interest in serving the country for obvious reasons, and it is doubtful that they would move in if the national airline disappeared.

Good to hear that despite this, they are getting on with doing the best they can under the circumstances.

With regards to cheap trans-Atlantic fares, I have heard this before but as others have said, I have never seen FI offering the cheapest fare, rather a US or UK airline, typically from LHR (probably because of the intense competition between those 2 markets). It's a shame because it would definitely make an interesting stopover.

I think the position of KEF could become quite interesting in the future with more flight over the North pole to Asia. I know the FI and KEF could sustain such flights on their own, but if they were active in *A for example, I could see some good cooperation with SK. Does anyone know if FI is planning any alliance in the near future or if they want to continue to be an independent carrier - obviously they are doing quite well so, but KEF could definitely be something like DXB or SIN for Northern Europa (in a much smaller context of course). They could work there geographical position more than they already do.

Quoting MAH4546 (Reply 5):Like Minneapolis, New York, and Sanford, the Boston flight relies on connections. Very little of the traffic is O&D. Boston probably doesn't even have enough O&D to Iceland to fill an ERJ-135.

The way I'm seeing this is that while you won't be able to fill a plane with solely O&D, there are enough pax to fill a plane where combined with connecting pax you have enough. Without local traffic or connecting traffic the route wouldn't work. That to me seems to be why ORD, for instance, doesn't have flights to Iceland. Chicago may have a lot of O&D for Europe where FI could connect pax at KEF, however there isn't enough local traffic to fill it up to be profitable enough. I could be wrong for other reasons, though.

Quoting Viscount724 (Reply 11):SK and FI applied for and were granted U.S. antitrust immunity in 2000, so they are free to do almost anything in terms of joint operations, pricing, codesharing etc. to/from the USA.

Since they are the only airline serving Iceland fares to and from Iceland are much higher than fares from Europe to the US and vice versa. I know about it because I had an Icelandic son-in-law for a few years and my daughter filled me in on the details. If you wanted to stay for a day or two in Iceland and continue on, the fare was reasonable. But any lengthy stay in Iceland would cost you.

The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler

Quoting BOStonsox (Reply 3):I'm surprised that MSP-KEF is being suspended because of the Scandinavian population in Minnesota. Of course, having a large Scandinavian population doesn't necessarily mean it has enough O&D for Scandinavia.

It's a winter thing. Fewer tourists in winter. Firstly, Scandinavia isn't that great to visit in the months when it has like 7 hours of daylight, and most in MN are heading southward in that season. We're losing our CDG flight for winter too. C'est la vie.

As for summer, it's like a holy pilgrimage thing - Minnesotans, a great number of whom are of scandinavian heritage, have to go there, often more than once. Denmark and Norway are places I'm kind of obligated to go to...

Icelandair caries a lot of MSP to europe traffic over the summer.

I think it's a strong city for connections to scandinavia. Heck, i bet they could even swing a 3x weekly 767 MSP-CPH or MSP-OSL or something like that, between hub feed and O and D, DL could do well next summer.

For the summer 2009 schedule there are still mediteranean destinations missing and due to the nature of north atlantic traffic the amount of flights will vary in the summer month of june,july and august.